Lawyer Questions Position Of Esm Trustee`s Law Firm

A federal judge is expected to rule next week on whether to disqualify Thomas Tew`s law firm from continuing to represent Tew as trustee for failed ESM Government Securities Inc. of Fort Lauderdale.

Tew`s firm is not a ``disinterested`` party in the case because it had previously represented ESM just before the firm collapsed March 4, Richard Smith, a lawyer for American Savings & Loan Association, said at a hearing Thursday in federal court in Fort Lauderdale.

``Somewhere down the road, someone may call the whole case into question,`` said Smith. ``We`ll be building in a land mine that can be exploded in the future.``

Tew is a partner in the New York-based firm of Finley, Kumble, Wagner, Heine, Underberg, Manley & Casey.

Smith told U.S. District Judge Jose Gonzalez he envisioned a ``horrible scenario,`` should Finley Kumble be bound by an attorney/client relationship that would interfere with the firm`s duties to the trustee. Finley Kumble is now the trustee`s counsel, but was initially retained by ESM for $500,000 to examine the company`s financial records. The firm later returned the money.

Tew received some type of ``letter of consent`` signed by ESM principals Nicholas Wallace and George Mead allowing Tew to switch from his role as ESM`s counsel to the estate`s trustee.

Some creditors` attorneys said they believe the letter also contained a waiver of the ``attorney/client privilege`` which precludes an attorney from disclosing information to the court that was obtained in confidentiality.

``They (Wallace and Mead) consented to my serving as a trustee and a receiver,`` said Tew. ``They did not specifically waive the attorney/client privilege.``

David Levine, an attorney representing Finley Kumble, argued that during the brief period the firm represented ESM, the services rendered were primarily serving the interests of creditors.

American Savings, which filed the motion to have Tew`s firm dismissed, has said it will lose up to $55 million from its securities transactions with ESM.